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Early research suggests some increases in state and local government spending more than offset the negative effects of the tax increases needed to fund them. More recent research finds the growth of state and local government generally discourages private sector growth. Using panel data on private employment, capital and output for the 48 contiguous states, the authors find that government size influences whether additional government helps or hinders private sector growth. The rapid growth of state and local government in the late 1980s likely outstripped the willingness to pay. With government growth moderating in the 1990s, however, the private sector response has become more favorable. (JEL H3, H4, R5)

WHAT'S THE TAKEAWAY? The Texas franchise tax burdens taxpayers without generating sufficient tax revenue. The tax is particularly hostile to smaller businesses and the business services industry. Revenue would be better raised by replacing the franchise tax with either a value added tax (VAT) or a broader sales tax that includes consumer services. ; In 2006, Texas faced a fiscal double whammy. Not only had the Texas Supreme Court ordered the state to pick up more of the tab for K-12 education, but the legislature promised voters significant property tax relief. To achieve both goals simultaneously, the Texas Legislature expanded the state's franchise tax (a form of corporate income tax) to include businesses other than corporations. A good idea in principle, but not in execution.

AbstractIn this paper we explore some of the policy issues related to the provision of primary and secondary education in the United States from an economic standpoint. We begin with stylized facts and a brief reference to the uniquely decentralized financing and delivery of public education in the United States, and the resulting issues of equity and quality that arise. As a reference point we review the basic efficiency and equity arguments for public financing and the provision of public goods in general, and education specifically, both of which suggest that current practices are unlikely to be efficient or equitable. These are issues that have motivated a number of policy avenues—the accountability movement, including No Child Left Behind, as well as recent efforts to establish higher and uniform standards for our public schools. We then turn to the sizable body of literature assessing school performance. We include an empirical example of this approach for Texas primary and secondary schools, with a focus on the many challenging issues involved with modeling and assessing educational performance.Our application demonstrates that research findings are highly sensitive to modeling choices, suggesting that a mixed methods approach is most likely to lead to effective education reforms.

ABSTRACT**:  This analysis compares the technical efficiency of charter school primary and secondary campuses with that of comparable campuses in traditional Texas school districts. Charter schools are hybrids—publicly funded, but not required to meet all the state regulations releant for traditional schools. Student performance is measured using value added on standardized tests in reading and mathematics, and efficiency is measured using the input distance function. The analysis suggests that at least in Texas, charter schools are substantially more efficient than traditional public schools.

This paper presents on three new styled facts: first, schools of public affairs hire many economists; second, those economists are disproportionately female; and third, salaries in schools of public affairs are, on average, lower than salaries in mainline departments of economics. We seek to understand the linkage, if any, among these facts. We assembled a unique database of over 2,150 faculty salary profiles from the top 50 Schools of Public Affairs in the United States as well as the corresponding Economics and Political Science departments. For each faculty member we obtained salary data to analyze the relationship between scholarly discipline, department placement, gender, and annual salary compensation. We found substantial pay differences based on departmental affiliation, significant differences in citation records between male and female faculty in schools of public affairs, and no evidence that the public affairs discount could be explained by compositional differences with respect to gender, experience or scholarly citations.

Regular salary equity studies can be a best practice among employers committed to salary equity and fairly managed compensation. While a well-constructed salary study can identify inequities for amelioration, a poorly constructed study can create rather than solve problems. Organizations may be deterred from doing these studies because of their inherent analytical challenges. We provide a guide for human resource managers describing how to conduct their own salary studies, how to interpret the results, and how organizations can apply the results. We describe best practices across public sector organizations and illustrate them with an example from higher education. We also provide a link to an online appendix containing sample code that can be used to conduct such analyses using two popular software packages. The twin goals of the article are to increase the quality of salary analyses while reducing the barriers to conducting them.